Making Tax Digital (MTD) is transforming how architects and architecture practices report taxes to HMRC. Rather than relying on annual paper Self Assessment returns, MTD requires digital record-keeping and quarterly updates using HMRC-approved software. For architects, this covers income from clients, project fees, consultancy work, and design services, as well as expenses like office rent, software subscriptions, travel, professional indemnity insurance, and staff costs.
While MTD may feel like an additional administrative task, it can provide architects with deeper insight into their business finances. Digital record-keeping allows architects to track project-based income, manage cash flow, and stay on top of allowable expenses. Whether you are a sole practitioner, part of a small firm, or a partner in a larger practice, understanding MTD and preparing early can make compliance straightforward, reduce year-end stress, and improve financial oversight.
Who Making Tax Digital Applies to (and Who Is Not in Scope Yet)
Making Tax Digital does not apply to all architects at once. Whether an architect or architecture practice is required to comply depends mainly on business structure and income level, rather than the type of architectural work performed.
MTD for Income Tax applies to self-employed architects and partners in unincorporated architecture practices whose gross qualifying income exceeds HMRC thresholds. From 6 April 2026, architects earning more than £50,000 per year will be required to comply. This threshold will reduce to £30,000 from April 2027 and further to £20,000 from April 2028, meaning more small practices and freelance architects will fall within scope over time.
Gross income is the key figure, not net profit. For architects, expenses such as professional indemnity insurance, software subscriptions, project-related travel, and office costs can significantly reduce profits, but the gross turnover determines whether MTD applies.
Architects who are VAT-registered are already subject to MTD for VAT, which requires digital VAT records and submissions regardless of income level. Those operating through a limited company are generally outside MTD for income tax because profits are subject to corporation tax, though directors may still have personal Self Assessment obligations. Practices or individuals below the income thresholds are not currently required to comply but may opt in voluntarily.
Understanding whether your practice is currently in scope or will be in scope in the coming years enables architects to prepare systems, adopt digital record-keeping, and avoid last-minute compliance issues.
When Architects Need to Start Complying – Key MTD Dates
Making Tax Digital for Income Tax is being introduced gradually, so architects and architecture practices will be required to comply at different times depending on their gross income. Understanding these key dates helps plan and avoid last-minute issues.
From 6 April 2026, self-employed architects and partners in unincorporated practices with gross qualifying income over £50,000 will need to comply with MTD for Income Tax. This requires keeping digital records and submitting quarterly updates to HMRC using MTD-compliant software, rather than relying solely on an annual Self Assessment return.
The rules expand from 6 April 2027, when the threshold drops to £30,000, bringing more small practices and freelance architects into the regime. By 6 April 2028, the threshold falls further to £20,000, meaning that most sole practitioners and part-time freelance architects will need to comply.
Architects who are VAT-registered are already within scope for MTD for VAT, regardless of income. Practices with fluctuating income should monitor turnover closely, as a strong year of project fees could bring forward MTD obligations. Early preparation, setting up digital systems, and establishing regular bookkeeping habits ensure smooth compliance and avoid penalties.
How Making Tax Digital Works in Practice for Architects
Keeping Digital Records
Under MTD, architects must maintain digital records of all business income and expenses. This includes client fees, consultancy work, project-based payments, office costs, software subscriptions, professional indemnity insurance, travel, and staff-related expenses. All records must be kept in MTD-compliant software. Digital record-keeping ensures that your income, expenses, and deductions are accurate, complete, and ready for submission.
Submitting Quarterly Updates
Instead of relying solely on an annual Self Assessment return, architects must submit quarterly updates to HMRC. These updates summarize income and expenses for the reporting period and provide HMRC with a running view of your practice’s financial position. The standard reporting periods and deadlines are
- Quarter 1: 6 April – 5 July → deadline 7 August
- Quarter 2: 6 July – 5 October → deadline 7 November
- Quarter 3: 6 October – 5 January → deadline 7 February
- Quarter 4: 6 January – 5 April → deadline 7 May
Submitting updates on time reduces the risk of penalties and allows architects to track profits, cash flow, and taxable income throughout the year.
End-of-Year Declaration
At the end of the tax year, architects submit a final declaration summarising all income, expenses, and deductions. Since most of the data has already been reported through quarterly updates, the end-of-year submission is simpler, more accurate, and less time-consuming. It ensures that all allowable expenses, professional fees, and adjustments are correctly accounted for.
Day-to-Day Benefits for Architects
While MTD introduces new reporting requirements, it can improve financial management. Digital record-keeping helps architects monitor project-based income, manage cash flow, and plan for tax payments in advance. It also reduces year-end stress and provides a clearer, more organized view of practice finances, supporting better decision-making for projects and resource allocation.
Common Mistakes Architects Make Under MTD and How to Avoid Them
Relying on Paper Records or Non-Compliant Spreadsheets
Many architects still track income and expenses using paper files or standalone spreadsheets. Under MTD, HMRC requires digital records to be maintained in approved software. Using non-compliant systems increases the risk of errors, omissions, and late submissions. Switching to MTD-compatible software early ensures accuracy and compliance.
Mixing Personal and Business Finances
Architects often use the same bank account for personal and business transactions. Mixing the two can lead to mistakes in quarterly updates and potential HMRC queries. Maintaining a dedicated business account and recording only legitimate business expenses in your digital system is essential.
Delaying Bookkeeping
Waiting until the end of the month or quarter to update records is a common mistake. This can lead to missing transactions, errors in categorization, or inaccurate quarterly updates. Recording income and expenses weekly, or after each project milestone, keeps records accurate and simplifies reporting.
Incorrectly Classifying Income or Expenses
Architects may misclassify project fees, consultancy income, or reimbursed expenses. Misclassification can distort taxable profit and cause errors in quarterly updates. Ensure software allows clear categorisation, and review entries regularly to avoid mistakes.
Missing Quarterly Submission Deadlines
Quarterly updates must be submitted on time:
- Q1: 6 April – 5 July → 7 August
- Q2: 6 July – 5 October → 7 November
- Q3: 6 October – 5 January → 7 February
- Q4: 6 January – 5 April → 7 May
Late submissions can lead to HMRC penalties. Using calendar reminders or software notifications helps you stay on track.
Assuming MTD Only Affects Large Practices
Some architects believe MTD is only for larger firms. With income thresholds dropping to £50,000 in 2026, £30,000 in 2027, and £20,000 in 2028, even small practices and sole practitioners may fall within scope. Planning ensures smooth compliance.
Practical Tips for Architects to Stay Compliant with MTD
Adopt MTD-Compliant Accounting Software Early
Choose software that fits the needs of your architecture practice and meets HMRC’s MTD requirements. Make sure it can track project-based income, consultancy fees, reimbursed expenses, office overheads, and staff costs. Early adoption helps you become familiar with the system and avoid last-minute issues.
Keep Personal and Business Finances Separate
Maintain a dedicated business bank account for all practice-related income and expenses. Avoid mixing personal and business transactions to prevent errors and ensure accurate reporting.
Record Income and Expenses Regularly
Update your digital records weekly, or after each project milestone, to keep income, expenses, and reimbursements accurate. Regular bookkeeping simplifies quarterly submissions and reduces year-end stress.
Set Reminders for Quarterly Updates
Quarterly deadlines are strict:
- Q1: 6 April – 5 July → 7 August
- Q2: 6 July – 5 October → 7 November
- Q3: 6 October – 5 January → 7 February
- Q4: 6 January – 5 April → 7 May
Use calendar alerts or software notifications to stay on track and avoid penalties.
Categorise Income and Expenses Correctly
Ensure fees from projects, consultancy work, reimbursed expenses, software costs, and office overheads are properly classified in your accounting software. Accurate categorization prevents errors in quarterly updates and end-of-year declarations.
Reconcile Bank Accounts Regularly
Some architects believe MTD is only for larger firms. With income thresholds dropping to £50,000 in 2026, £30,000 in 2027, and £20,000 in 2028, even small practices and sole practitioners may fall within scope. Planning ensures smooth compliance.
Seek Professional Advice if Needed
If your practice has complex arrangements, such as multiple projects, VAT registration, reimbursed expenses, or payroll for staff, consulting an accountant familiar with MTD for architects can help prevent errors and save time.
Conclusion
Making Tax Digital (MTD) for architects may feel like a significant change, but with careful planning and the right systems, it is entirely manageable. By keeping digital records of all income, including project fees, consultancy work, and reimbursed expenses, as well as expenses such as office overheads, software subscriptions, insurance, and staff costs, architects can ensure quarterly updates to HMRC are accurate and complete. Regular updates, proper categorization, and the use of MTD-compliant software not only ensure compliance but also provide clearer insight into cash flow, project profitability, and overall financial health throughout the year.
Planning is essential, as income thresholds reduce to £50,000 in 2026, £30,000 in 2027, and £20,000 in 2028, bringing more sole practitioners and small practices into scope. By following practical tips, keeping up-to-date digital records, separating personal and business finances, reconciling accounts regularly, and seeking professional advice when necessary, architects can avoid penalties, improve efficiency, and manage their practices more effectively. With the right approach, Making Tax Digital becomes a tool to streamline financial management rather than a burden, allowing architects to focus on delivering excellent projects and client service.
